Office leasing in New Jersey hit even lower levels for the first quarter, which is attributed to aging facilities, underused buildings and corporate consolidation, according to a report in the Wall Street Journal.
Office leasing did well where buildings are located in transit-rich areas.
A report from real estate services firm JLL reported that the New Jersey office market posted 1.75 million square feet of new and renewed lease deals. JLL is a professional services and investment management firm specializing in real estate. They also reported that the vacancy rate rose to 24.9%, up 0.3 percentage point from the same time last year.
Another analysis from Colliers International, a real estate services firm, indicated that the first quarter’s office leasing of 2.4 million square feet of leases is their lowest quarterly total since the second quarter of 2014.
Mergers and consolidations of many large companies and for New Jersey especially its pharmaceutical base left large vacancies. New tenants are significantly smaller and are looking for urban conveniences and amenities.
New trends are pointing more toward open-office layouts and communal work spaces.
High quality buildings that possess easy access to transportation including highways are leasing quicker. Suburban properties that are making sure that their complexes include “downtown conveniences” such as restaurants, fitness centers and coffee bars are emerging as winners in the market.
Quarterly leasing for new deals averaged 2.49 million square feet between 2005 and 2007.
The new normal started at the bottom of the market in 2008, where quarterly leasing averaged 1.69 million square feet. By these new standards, the current activity sets a new benchmark.
JLL stresses that at least 3 forces are shaping this new landscape of commercial real estate: volatility, agility and optimization.
Since many spaces are being shared and there are at least 20 million people working from a “third space,” office design is being affected by it. This distant working employee population will only increase as more and more of business is conducted both virtually and through the cloud. The optimization factor includes locations that are transit-rich areas. Speed to market also factors-in the access to major transportation hubs. This is materializing in Amazon’s big push to set up logistic processing centers in New Jersey because of its transit-rich access. It’s all about the ability to achieve and maximize the highest possible performance.
The other factor being considered when leasing commercial space is its access to pockets of strong talent pools. This ultimately proves to become a true competitive advantage.
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